The Italian has agreed a deal, subject to a "successful conclusion", through to the 2010 World Cup which is understood to be worth £4 million a year, around double the amount Sven-Goran Eriksson was paid when first appointed in 2001.

Eriksson eventually negotiated a deal similar to that which Capello has agreed, but it remains a significant increase on the £2.5m-a-year contract that Steve McClaren was handed last year.

It also places Capello up with the likes of Sir Alex Ferguson and Arsene Wenger among the highest paid coach across world football.

Ferguson and Wenger, who recently agreed a new deal until 2010, are also both on around £4m a year.

The richest managerial deal in football history, however, remains the £5.2m salary that Jose Mourinho was paid at Chelsea prior to his departure earlier this season.

It is understood that Mourinho would have cost the FA around £6m a year.

According to a survey by the France Football Magazine earlier this year, Capello also earned around £4m a year at Real Madrid, while Barcelona's Frank Rijkaard (£3.2m) and Inter Milan's Roberto Mancini (£2.4m) were among the other top earners.

Capello's contract will also almost certainly makes him the most highly-paid international manager.

Guus Hiddink, whose salary with Russia is part-funded by Roman Abramovich, is said to be on £2m a year.

Another strong candidate for the England job, Marcello Lippi, was paid just £1m as the Italy manager who lifted the World Cup last year.

It is all a far cry from the days of Sir Alf Ramsey. Capello's wage is around 500 times higher than the £7,500 earned by Ramsey prior to his sacking in 1974.

Don Revie was subsequently appointed on £25,000 a year as salaries for managers gradually rose over the next two decades.

Terry Venables was understood to be on around £150,000 as England manager in 1996, followed by Glenn Hoddle on approximately £250,000 and then Kevin Keegan on an estimated £650,000.

The appointment of Eriksson, though, was something of a watershed and the FA now clearly accept that they must pay a world-class salary for their new world-class manager.